$11 Prescriptions: What U.S. Health Care Can Learn From Germany
With Meghna Chakrabarti
Germany has a private health care system like the U.S., but even the sickest patients rarely pay more than $11 for a prescription.
Journalist Noam Levey, who writes about national health care policy for the Los Angeles Times, spoke with On Point’s Meghna Chakrabarti to discuss the differences — and similarities — between the U.S. and Germany’s health care systems.
“Nobody’s health care system is an exact replica of anybody else’s, and of course nobody does it like we do. But most other countries have a bit more rational systems for the way they do things,” Levey says. “I think a lot of people think, ‘Oh, if it’s Europe, it must be a single payer system. It must be like Medicare-for-all, the government just has a health insurance plan, and everybody gets their coverage that way.’ That is true in some places, like the United Kingdom. But, it’s not true in Germany or Holland or Switzerland or a number of other wealthy countries.”
Noam Levey, writes about national health care policy out of Washington, D.C., for the Los Angeles Times. (@NoamLevey)
Leigh Purvis, director of health services research at the AARP Public Policy Institute. (@leighdrugwonk)
On Germany’s health care system
Noam Levey: “American patients know all too well that when you go to the drug store you often times don’t know how much your co-pay is going to be [or] how much your deductible is going to be. You could be paying a few bucks for that drug that your doctor prescribed to you [or] you could be paying a thousand dollars. Germany has a much more tightly regulated limit on how much patients can be required to pay for a whole range of medical services. … The maximum per prescription cost for German patients is basically 10 euros or about 11 dollars. In many cases it’s lower than that, and there are, for lower income patients, exemptions. Remember, I said that if drugs are really expensive, that puts pressure on insurers to raise premiums. Well, insurers can’t charge patients more, because it’s a 10-euro maximum, so they instead were under pressure to raise the premiums.”
On Germany’s “sickness funds”
NL: “Just as in this country, where when the price of drugs goes up, that puts pressure on the insurance premiums that all of us have to pay. German “sickness funds,” as they’re called, these are health insurers, but they’re a little bit different than ours because they’re not-for-profit and they’re much more highly regulated than ours are. But, when those sickness funds had to cover very expensive drugs starting in the early 2000s, they were under a lot of pressure to raise premiums, and that of course was not going to be popular with German patients. So there was a growing consensus about a decade ago that something had to be done.”
On differences between the FDA and sickness funds
NL: “The FDA is a safety regulatory agency. It’s trying to figure out whether the drug is safe and, broadly speaking, effective. There is a European process for the European equivalent of the FDA that does the same thing. But the FDA is not charged with comparing these new drugs to existing therapies and trying to make a judgment about whether new drugs are better or worse … [Sickness funds are] not a government agency. It is an independent non-governmental agency. It’s actually not even located in Berlin, where the government is. It’s in Cologne, on the other side of Germany. One important part of what this agency is charged with doing is looking at what the drug companies are submitting.”
On Germany’s differing model for drug price negotiation
NL: “The insurers are private, so they’re independent from one another. But, very importantly, they negotiate collectively. So all the insurers get together and they sit across the table from the negotiators — from Eli Lilly or Pfizer or Sanofi — and they use this independent report as a point to inform their negotiations. … This collective negotiation means that there’s one price that is agreed to in the system and then really, really importantly [and] really, really different from the way we do it here: It’s public. It’s transparent. We know — and Germans know — what the price that is negotiated between the drug companies and the sickness funds is. And of course that’s completely different than here, where everything is a black box.”
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Los Angeles Times: “German patients get the latest drugs for just $11. Can such a model work in the U.S.?” — “Patients who come to the Havelhöhe cancer clinic in the leafy outskirts of Germany’s capital are often very sick.
“Struggling with advanced-stage cancers, many need strong doses of expensive, cutting-edge chemotherapy that can run into the hundreds of thousands of dollars.
“But like all Germans, none of the patients sitting quietly in the infusion ward here pay more than 10 euros a prescription, or about $11. ‘We never talk about costs,’ said Dr. Burkhard Matthes, a senior oncologist at the clinic.
“Germany’s ability to provide citizens access to the latest drugs while keeping patients’ costs so low is made possible by a novel strategy launched in 2011 to rein in exploding prices that were threatening to bankrupt the nation’s health care system.
“Mixing free-market incentives to encourage innovation with regulation and lots of transparency, Germany’s drug review process gives manufacturers the chance to bring new products to market and charge higher prices — but only if they can show the new medications are better than existing ones.
“Nearly the entire process is open to the public, giving doctors, hospitals and patients access to not only new drugs, but also independent evaluations of how well they work.
“And it’s kept drugs accessible. Just 7% of Germans reported cost-related problems getting medical care in the last year, compared to a third of Americans, an international survey found.”
The Economist: “American drugmakers are raising prices. Again” — “‘If you think the cost of your drug will scare people from buying your drugs, then lower your prices.’ That blunt warning was issued recently by Alex Azar, America’s health secretary, to global pharmaceutical giants. A new report by ubs, an investment bank, finds that Americans spent nearly two-thirds of all money spent globally on new drugs from 2012 to 2017. On June 14th Bluebird Bio unveiled a gene therapy to treat an inherited blood disorder that will cost nearly $1.8m per treatment. Shortly before, Novartis, a Swiss giant, priced its gene therapy for spinal muscular atrophy at $2.1m, making it the world’s most expensive medication.
“Outrage over such headlines is a rare thing to unite President Donald Trump and his Democratic detractors. Many cheered the administration’s latest effort to force drugmakers to disclose the list price of drugs in television advertisements.”
Washington Post: “White House is reviewing a new index to cut Medicare drug spending” — “Eight months ago, President Trump vowed to bring federal payments for some Medicare-covered drugs more in line with lower prices for the medicines in other countries. It was a move that struck many as especially aggressive for a GOP administration but meshed with Trump’s vow to lower the price of prescription drugs.
“A proposed rule for the experimental international pricing index is being reviewed by the White House Office of Management and Budget as of Thursday, indicating the Department of Health and Human Services is finally moving forward on it after some delay.
“There’s enthusiasm inside HHS for the index, which would tie the prices for drugs covered by Medicare and distributed by doctors to an average of lower prices paid in 16 other countries, where the government plays a much more active role in setting prices. But the drug industry and some conservative groups are fighting hard against it, and Sen. Chuck Grassley (R-Iowa), head of the powerful Finance Committee, poured cold water on the proposal after holding his fire for months.”
Stefano Kotsonis produced this hour for broadcast.
This article was originally published on WBUR.org.
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